Warren Buffett Sells His S&P 500 Index Funds Before the Market Crash and Buys a Restaurant Stock Up 375% in 10 Years

Trevor Jennewine, The Motley Fool

Sun, Apr 27, 2025, 3:40 AM 5 min read

On April 2, President Donald Trump unveiled his "Liberation Day" tariffs, which included a 10% tax on most imported goods and heavier country-specific duties dubbed reciprocal tariffs. The news stunned Wall Street. The S&P 500 (SNPINDEX: ^GSPC) declined 12% during the next five trading days, leaving the index 19% below the record high reached in February.

Ahead of that tariff-driven market crash, Warren Buffett's Berkshire Hathaway made two interesting capital allocation decisions in the fourth quarter. Of course, neither Buffett nor his co-investment managers could have known what was coming, but the trades are still worth exploring:

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Berkshire sold its entire position in two S&P 500 index funds, the Vanguard S&P 500 ETF (NYSEMKT: VOO) and the SPDR S&P 500 ETF Trust (NYSEMKT: SPY).
Berkshire added to its stake in Domino's Pizza (NASDAQ: DPZ), a restaurant stock that has returned 375% in the last 10 years.

Here's what investors should know.

Why Warren Buffett sold his S&P 500 index funds

The S&P 500 is the best barometer for the U.S. stock market because it tracks 500 large domestic companies that form the core of the American economy. Warren Buffett has frequently recommended owning an S&P 500 index fund and has on several occasions warned investors to never bet against America.

Yet, Berkshire sold its entire stake in two S&P 500 index funds during the fourth quarter, which seems a direct contradiction to the advice Buffett has doled out in the past. But there is a simple explanation: Buffett wants to beat the index: "Our job is to increase per-share intrinsic value at a rate greater than the increase (including dividends) of the S&P 500," he wrote in 2010.

Additionally, Berkshire had less than 0.02% of its portfolio invested in the Vanguard S&P 500 ETF and SPDR S&P 500 ETF Trust, collectively. So, Buffett's decision to sell those index funds should not be interpreted as a lack of confidence in U.S. stocks, but merely a liquidation of two very small positions that were working against his goal of outperforming the S&P 500.

Importantly, Buffett recently told CBS, "A majority of any money I manage will always be in the United States." So, patient investors should feel comfortable holding an S&P 500 index fund in the current market environment.

A well-dressed person looking contemplatively at a computer. — Image source: Getty Images.

What investors should know about Domino's Pizza

Domino's is the largest pizza company in the world. Innovation has been essential to its success. Its AnyWare technology lets customers place orders through nonconventional digital channels, such as text messages, smart speakers, and social media. And Pinpoint Delivery allows customers to receive those orders at parks, beaches, and other nontraditional locations.

Domino's uses artificial intelligence (AI) to anticipate online orders and pre-emptively prepare pizzas before consumers complete their purchases. Doing so improves the customer experience by shortening delivery times. Likewise, Domino's uses AI to visually inspect pizzas to ensure accuracy and quality and to surface insights from customer feedback.

In 2023, Domino's announced its "Hungry for More" strategy: The company aims to open at least 1,100 stores per year through 2028 while growing sales and operating income at 7% annually and 8% annually, respectively. As part of that strategy, Domino's partnered with Uber Eats in 2023, and it recently partnered with DoorDash in select U.S. markets, with a nationwide launch to follow in May.

Domino's reported disappointing financial results in the fourth quarter, missing estimates on the top and bottom lines. Revenue increased 3% to $1.4 billion, and GAAP (generally accepted accounting principles) net income increased 9% to $4.89 per diluted share. But there was a silver lining: Domino's gained a percentage point of market share in quick-service pizza as it continued to crush competitors like Papa John's and Yum! Brand's Pizza Hut in terms of same-store sales growth.

Wall Street estimates that Domino's earnings will increase by 8% annually in the next two years. While that aligns with the performance goals associated with the "Hungry for More" strategy, it still makes the current valuation of 29 times earnings look expensive. With Domino's stock up 16% year to date, I think investors should wait for a better entry point before buying shares.

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Trevor Jennewine has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Berkshire Hathaway, Domino's Pizza, DoorDash, Uber Technologies, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

Warren Buffett Sells His S&P 500 Index Funds Before the Market Crash and Buys a Restaurant Stock Up 375% in 10 Years was originally published by The Motley Fool

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